RBS scraps sale of insurance division

RBS has withdrawn its Direct Line personal lines insurance arm from sale. The sale launched 10 months ago had hoped to attract a £6bn to £7bn price tag. New chief executive Stephen Hester, who took over from Fred Goodwin in January, declared RBS’s insurance assets as a core part of the group for the future, adding: “Given RBS’s broader considerations, it was important to test the market for this business which has demonstrated that a sale on terms currently available would destroy value for RBS’s shareholders. “

RBS Insurance benefits from a leading market position, strong cash generation and low capital requirements. It does not absorb funding or risk-weighted assets and is not closely connected to the credit cycle. It is an impressive, well-run business with great people and excellent customer franchises. It can play an important role as we return the RBS group to standalone strength.” The move marks a sea change in the embattled bank’s strategy compared to that of the previous management team.